COVID-19 and the 'race tax'

A map created by agents of the federal government's Home Owners' Loan Corporation between 1935 and 1940. Neighborhoods that received the highest grades were considered minimal risks for banks and other mortgage lenders who determined who should receive loans and what areas were considered safe investments. HOLC agents wrote of Garfield Park at the time: "This is a mediocre district threatened with negro encroachment east of Sacramento Avenue." | Courtesy Mapping Inequality: Redlining in New Deal America

According to the Centers for Disease Control, nearly a third of COVID-19 cases in the United States have afflicted African Americans, who comprise only 13 percent of the country's roughly 330 million people.

Since this disproportionality was made abundantly clear a few months ago, there's been a tendency to look at it spatially.

"In urban centers large and small across the U.S., the novel coronavirus is devastating African-American communities," writes a reporter for National Geographic.

"The environments where most live, the jobs they have, the prevalence of health conditions such as high blood pressure and diabetes, and how they are treated by the medical establishment have created a toxic storm of severe illness and death. (These common, underlying conditions make coronavirus more severe.)"

That's indeed the case. In Chicago, African Americans are 29 percent of the city's population but make up roughly half of COVID-19 deaths. And those case numbers and death totals are concentrated in black communities like Austin.

But make no mistake, the disproportionality is not just limited to black spaces. Black bodies everywhere are at higher risk of contracting and dying from this disease.

African Americans are 18 percent of Oak Park's roughly 52,000 residents, but as of May 15, they were 44 percent of the 236 confirmed positive COVID-19 cases, according to the Oak Park Public Health Department.

In Forest Park, where African Americans are 27 percent of the population, as of May 18, they represented 41 percent of the 107 confirmed positive COVID-19 cases.

What the data shows is that for African Americans, there is no escaping the risk of race. But what most commentary I've read about the racially disproportionate impact ignores is how this risk was manufactured by whites in the first place and that it was the perception of risk that created the reality.

We can attribute COVID-19's disproportionality to a range of factors, several of which National Geographic outlined above, but in the grand scheme of things, those are all secondary to the essence of the matter, which is the chronic wealth gap between African Americans and whites — a gap that was cleaved by the idea that blacks are unworthy, particularly of credit to finance homes (a primary source of wealth for most people) and of capital to build more wealth.

What's more, the historic denial of credit and capital to blacks has been directly correlated to the accumulation of the same among whites.

Take, for instance, the Freedmen's Savings Bank. Founded in 1865, pamphlets promoting the bank at the time described it as "Abraham Lincoln's Gift to the Colored People." But the bank wasn't actually a bank in the traditional sense.

Instead of lending to freedmen in order for them to grow their own businesses or purchase their own property, the bank simply collected the freedmen's savings and served as a "teaching institution" designed to "instruct freed slaves about American values and 'to instill into the minds of the untutored Africans lessons of sobriety, wisdom, and economy,'" writes Mehrsa Baradaran in The Color of Money: Black Banks and the Racial Wealth Gap.

Within a decade of its founding, the bank had collected more than "$75 million of deposits by more than 75,000 depositors, an amount that would be approximately $1.5 billion today." Despite freedmen comprising virtually all of the depositors, they were not represented in the bank's management. And they had no say in how the money was invested.

In 1870, the bank's managers persuaded Congress to "amend and deregulate its charter," effectively turning the savings institution into a private investment bank. But soon after deregulation, instead of investing the deposits in black businesses or property that would allow African Americans to begin wealth-building after two centuries of slavery, "the bank managers" — the very people who were preaching the value of financial sobriety and wisdom to the freed slaves — "began speculating in real estate and then, quite simply, a close ring of managers with unfettered discretion plundered the savings of the freedmen."

Those investments began to unravel in the Panic of 1873, which precipitated the bank's free fall. In March 1874, "in a last ditch effort to save the bank," the trustees made Frederick Douglass its president. After lending the bank "$10,000 of his own money to cover the bank's illiquid assets," Douglass quickly figured out the ruse and alerted Congress to the bank's insolvency declaring, "that he 'could no longer ask [his] people to deposit their money in it.'"

The bank was shut down for good in 1874, but not before "more than half of accumulated black wealth disappeared through [the bank's] mismanagement."

According to the 1969 book The Negro as a Business Man, by John Henry Harmon, Arnett Grant Lindsay, and Carter Godwin Woodson, "What is most lamentable is the fact that only a few of those who embezzled and defrauded the one-time liquid assets of this bank were ever prosecuted."

Or take the history of the U.S. housing market.

"From the inception of the housing market in the United States, its viability had been structured around a scaffolding of racial knowledge that presumed insight into the speculative elements of 'good housing' and 'good neighborhoods,' which could then be actualized through ascending property values," writes Keeanga-Yamahtta Taylor in Race for Profit: How Banks and the Real Estate Industry Undermined Black Homeownership.

Segregating African Americans into urban ghettos like Austin and "starving those communities of resources and other investments greatly limited their access to better-paying jobs and well-resourced public schools, while pushing them into substandard housing," Taylor writes. "These conditions were then spun into the evidence that African Americans were unfit as potential homeowners and deleterious to property values within the housing market."

That blacks were unfit for good housing was a justification for confining them into "black-only neighborhoods where they could not 'infect' the larger housing market." The "scarred geography" of places like Austin was the "physical evidence invoked to legitimize keeping" blacks out of places like Oak Park.

Real estate operatives profited on the "allure of exclusivity for whites" that was created exclusively from the distance their homes were from "inferior" black communities — what's called a "race tax" (in one sense, the tax is colorblind, because it can also be felt by whites who live within proximity to blacks; just ask Oak Parkers who own homes on the east side).

But the very remedies that, at certain points in history, more enlightened whites have proposed to address this race-based economic exploitation have themselves been tools for further exploitation and predation.

In the early 1960s, after the assassination of Martin Luther King Jr. and the urban riots (what historians more accurately call upheavals or rebellions), the federal government slowly implemented laws to open up the segregated housing market, but the very real estate operatives and private interests that created the segregated market in the first place were now put in charge of carrying out so-called reforms.

Taylor calls this post-1960s era of reform "predatory inclusion." In the past, blacks were denied the ability to purchase long-term, low-cost, government-backed mortgages. Now private real estate operatives, aided and abetted by government policies, coaxed blacks into purchasing "subprime," or junk, loans in order to feed an overheated housing market that was desperate for higher profit margins.

When the subprime industry collapsed in 2008, black homeowners who were disproportionately herded into taking out those junk loans (regardless of their actual credit standing) lost everything while the profits, disproportionately owned by whites, were largely protected. Again, virtually no one was prosecuted.

Even for blacks in the suburbs, the creation of what Bararadan calls a "Jim Crow credit market" paved the way for a debt-cycle to become self-reinforcing.

"While the small black middle class may have been earning incomes similar to the white middle class, their upward mobility carried much higher interest," she writes. "Over 70 percent of suburban black families had to borrow just so they could purchase cars, appliances, furniture, and the life necessities.

"Because the black middle class had more debt, they were charged higher interest on each new loan. More debt begets higher interest and vice versa. The added debt burden and high interest was a direct result of the lack wealth, and, looping around once again, the debt made it even harder to accumulate more wealth. The debt-wealth cycle fed on itself."

In 2016, the $171,000 net worth of a typical white family was 10 times greater than the $17,150 net worth of a typical black family, according to a recent Brookings report.

Risk follows race, whether African Americans live in inner-cities like Austin or in suburbs like Oak Park — and in both places the equation equals plunder.

In order to evaluate future reforms then, "we must absorb the lessons of the past and make sure we are not repeating the same mistakes," Baradaran writes, adding that we should apply a "short litmus test to any policy proposal: does the program require some collective sacrifice or does it place the burden of closing the wealth gap entirely on the black community?"

CONTACT: michael@oakpark.com

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Bottom line takeaway for me - be kind to one another. No need to point fingers, call one another names, or look for someone else to blame. Live and function like a community and do your part to care for people in need.

Brian Slowiak Facebook Verified

Posted: May 22nd, 2020 4:18 PM

No mention of the programs and funds of the local county and city governments over the course of decades that have not addressed the issues. Or how the Federal funds were spent. .

Chris Johnson from OP Facebook Verified

Posted: May 21st, 2020 4:14 PM

I don't disagree about the issues. But I read this: "Segregating African Americans into urban ghettos like Austin and "starving those communities of resources and other investments greatly limited their access to better-paying jobs and well-resourced public schools, while pushing them into substandard housing," Taylor writes. "These conditions were then spun into the evidence that African Americans were unfit as potential homeowners and deleterious to property values within the housing market." That blacks were unfit for good housing was a justification for confining them into "black-only neighborhoods where they could not 'infect' the larger housing market." The "scarred geography" of places like Austin was the "physical evidence invoked to legitimize keeping" blacks out of places like Oak Park." And then read this by the same author: https://www.oakpark.com/News/Articles/4-3-2018/How-the-'68-riots-rocked-Oak-Park-/ I am only Mexican but if I lived in that neighborhood that was destroyed (leaving only black businesses). I'd pack up and leave the mess. That leads me to believe that this is what people wanted in that area. Driving out others through fear and destruction of their businesses, home, cars (if I read correctly, non-blacks were pulled off of buses and away from stores they wanted to close to protect them). To move to a place where they would hope it wouldn't happen again.

Bryan Rekarson from RF Facebook Verified

Posted: May 21st, 2020 3:31 PM

Warren's Refinement absolutely destroying it. Elloquent and factual. Not much else needs to be said.

Chris Damon from Oak Park Facebook Verified

Posted: May 21st, 2020 1:47 PM

Always good to be reminded of the sad history of unfair economic treatment of African-Americans. That injustice needs to be remembered. But the causal link that is missing in this article is an explanation of how the racism-caused wealth gap has led to greater incidence of high blood pressure and diabetes among the US black population (and thus more COVID fatalities.). We know that those two comorbidities are strongly correlated to COVID-19 all over the world from China to Italy. Yet Chinese and Italians with hypertension and diabetes who are succumbing to COVID aren't dying at a higher rate than others due to structural racism in their societies. It's largely due to their chronic health issues.

I suggest that if this columnist wants to examine the link between banks, government, and the housing market, he focus on Bill Clinton's signing of the "Commodity Futures Modernization Act of 2000". This one forgotten moment in history allowed Credit Default Swap insurance to be issued on home mortgages, and incentivized the type of lending that every institution who trades in them counts on to fail. It's no different than allowing the purchase of 16 fire policies on a house you plan on burning down. It is absolutely the time bomb that blew up in 2008, with the fuse being fraudulent bond ratings by our biggest agencies, and 17 consecutive rate hikes by the Fed. This evil cost 22 million families their homes (not just poor, or African American), and resulted in credit damage, mental health issues, suicides, and poverty that haunt us to this day. The column stated that only a few people were prosecuted in the 1874 banking scandal? Well Obama's Attorney General, Eric Holder prosecuted none.

Warren's Refinement from Saint Joseph, MI Facebook Verified

Posted: May 21st, 2020 10:27 AM

Anyone who lived in Oak Park when Austin was just another a neighborhood your parents allowed you to walk into to go watch cartoons at the theater, and stop at the hobby shop, dime store, or coin shop on the way home, knows this article was written by someone whose viewpoints have been mostly shaped by the books he reads. That's his choice, but as a person whose views were shaped by actually living in Oak Park when violent riots were so close the sky was lit with fire and smoke was in the air, I know that no bank, and no person, white or black, could have guaranteed Oak Park had rising property values in its future. My own father joined thousands of other residents, who uprooted their businesses and families, and fled to the suburbs seeking safety. It wasn't till seeing a PBS documentary about Oak Park's diversity efforts when I was a teenager that the thought of returning to my home town sounded appealing. When I returned in 1981, Oak Park was still a town that very much could have gone either way. Lake Street was closed and mostly dead, and there were tired or dilapidated homes on nearly every block. Fortunately, the seeds of a great movement were underway, and I joined the ranks of the "Chicago Rehabber" movement. This resulted in many newcomers blowing life into Oak Park's housing stock, using Historic Preservation as our guide, not the house-flipping principles we see today. I also became an Oak Park Realtor, which exposed me to hundreds of other committed individuals in virtually every bank, law firm, and title company instrumental in attracting investment back into Oak Park. The idea that this phenomenon was orchestrated to keep blacks out of Oak Park, and create an exclusive white enclave is preposterous. It shrugs off the risks and efforts of too many people, and besmirches the intentions of thousands of Oak Parkers, who did their best to be color blind when the threat of what happened in Austin was knocking at their door.

Tommy McCoy Facebook Verified

Posted: May 20th, 2020 5:07 PM

Michael Roman I noticed Keeanga-Yamahtta Taylor writes, "Segregating African Americans into urban ghettos like Austin and "starving those communities of resources and other investments greatly limited their access to better-paying jobs and well-resourced public schools, while pushing them into substandard housing," which I would have to disagree that Austin was a ghetto. Austin was a blue collar area with White workers who fled when there was a movement of African American's moving into the area. It was not a ghetto at that time. For employment, most White people had blue collar jobs so they would travel using public transportation to get to their jobs. The local businesses were around for the area and several did stay for a long time. It was called White Flight, and Oak Park was concerned it was going to spread into Oak Park, with people moving, so Oak Park promised home owners that if their home values decreased, they would make up the difference. The major industry in the area for factory work was the Brach's Candy Company which employed over 3500 people in the 1980's and finally closed in 2003 because it was bought out. It is important to get history correctly so things do not get lost or given out falsely. If I am wrong, please correct me, although it is easy to create a lot of history at times and we want to make sure it is correct

Tommy McCoy Facebook Verified

Posted: May 20th, 2020 2:42 PM

Michael Roman good story about some history of how African American's have been treated. Check into this story because the Mayor is African American and is treating people wrong if this story is correct since history is good to learn from although we are dealing with what we have now https://blockclubchicago.org/2020/05/20/last-year-it-cost-5-for-west-side-community-gardens-to-tap-into-city-water-now-the-price-is-1700/

Noola Laguardia Facebook Verified

Posted: May 20th, 2020 2:27 PM

Great writing! The historical context is important and added to the dialogue in a meaningful way

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